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Tough Times for the Tata Nano

The Tata Nano, with a projected price of about $2,500, was hailed as the world’s cheapest car when it was introduced in January, but nearly a year later there is still no factory to build it.

Tata Nano, at the New Delhi Auto Expo in January. (Tomas Munita for The New York Times)

Farmers have filed a case against the Indian government and Tata Motors, demanding better compensation for land sold to support the latest Nano factory in Gujarat, India. Sales of the Nano in India – originally scheduled for October of this year – will not begin until next spring.

This is the second time that Tata has faced off against angry farmers and politicians. A similar series of protests erupted this summer, at a factory purpose-built for the Nano in the town of Singur, in the state of West Bengal. Protesters (led by a handful of local political leaders) alleged that Tata forced farmers from their land or paid a fraction of the land’s true value.

By October, the Singur protests had grown in size and intensity. Highways surrounding the factory were at a standstill, and workers were being threatened. Tata finally abandoned the Singur factory, in which it had invested $350 million, according to the BBC at the time.

“There is no way this plant could operate efficiently unless the environment became congenial and supportive of the project,” a Tata spokesman said.

Plans to build a new factory in Gujarat seemed to put the Nano back on track. But another land dispute has sparked a sense of déjà vu for Tata.

“The land dispute is real,” said Paul Blokland, managing director of Segment Y, an automotive consulting firm based in Goa, India. “The locals say that the lease on the land has run out, and that it therefore reverts to them, while the government says it bought off the original landowners in the 1920s.”

Once again, Tata has been forced to find a quick solution. Automotive News reported recently that Nano production will now begin at Tata’s existing factory in Pantnagar in the northern state of Uttarakhand. And according the Economic Times on Friday, Tata has received an allotment of land from the Uttarakhand government to expand the Pantnagar factory for Nano production.

Even with a rapid expansion of the Pantnagar factory, sales of the Nano will (at least initially) fall well short of Tata’s original expectations, Mr. Blokland said.

“The plant in Gujarat will not start serious manufacture until late next year,” he said, adding that the Nano will be produced in small numbers, between 3,000 and 4,000, in Pantnagar, calling it a “soft launch.”

This is far from the 100,000 annual sales Tata envisioned when the Nano made its debut at the New Delhi Auto Expo in January.

The current situation is different from the earlier one Tata’s were facing at Singur. In a country like India, where “sentiments” play an important role, we must understand that the same people in Gujarat region (where the facility is currently located) are the ones who gave their lands freely to Mr. JRD Tata, in 18th century to fight the British. The problem at Gujarat facility is regarding the compensation package, which I feel that Tata’s would be able to settle amicably.

I think the delay in rolling out the first Nano is a blessing in disguise for Tata Motors given the current economic conditions. Nano would create the buzz and exceed the sales volume, if introduced when the economy just starts recovering.

It’s a great pity. I was born in India and have Indian blood in my veins.

India has the technology, the brains, but corruption, there, as elsewhere in the world, prevents needed progress.

I had great hopes that the Nano would be an answer to some of the ridiculous vehicles still being manufactured in the West, in terms of size and cost-efficiency. The Indian government would do well to take care of these matters for the country’s good and the need for such a car, worldwide.

People outside of the United States are only too willing to criticize the business environment in the US. But our allegedly odious laws and regulations, the same ones that motivate businesses to locate their factories elsewhere, are the same rules that prevent these types of problems. Surely we have to do environmental due diligence here in the States. Yes, we have to pass through onerous zoning laws and all the other building codes that add to the expense of a project such as this factory. The upside? Never in a million years would a factory be built here, and $350 million sunk into it, BEFORE these types of questions were settled. That somebody at Tata was able to dump $350 million WITHOUT FIRST resolving the providence of the land, is breathtaking.

Tom (#4): The Tata FAMILY can decide to spend money ANY WAY they choose … in the excitement of the idea the HEAD MAN says do it, HE signs off on all design and spending etc. No one to question. Sort of like Cheney and Bush taking us to war. No?

Tom, I think you actually have the situation wrong. The reason the initial factory in Bengal was problematic was due entirely to political problems that existed in Bengal. The land legally belonged to Tata, but due to the violence that erupted there, Tata felt it could not reasonably operate in such an environment. This is not due to a lack of environment study or something of that sort.

Just about every sensible company with facilities in India conducts due diligence on the land, which is obviously of critical importance. In our factory in India, we do testing for all kinds of issues including seismic testing, environmental testing, and various other such things. By the way, our partners are Indian and they require more testing than we would normally do in America.

Gregory makes an interesting point. If there’s one substantial difference between government in India and government in China it’s that the government in China faces no opposition, and can therefore focus entirely on progress and development.

Where India falls behind is that the opposition party, no matter which one it may be, is not interested in progress and development. They’re simply looking to get elected again, which leads to scenarios in which they hold back development by making politically incendiary calls to arms, as took place in Bengal against Tata’s project.

The sad part about all this is that the 2 leading parties, the BJP and Congress, both share virtually identical economic policies, which would be fantastic if they were freely and effectively put into place. The only problem is that the other is always in opposition. I long for the day when the BJP and Congress can share the spoils and enact positive policies at a lightening rate.

It would be interesting to read an article focused on the dollars-and-cents details of the case itself.

Given the $350M already invested, it’s hard to believe wrangling over a plot of land to situate a factory out in rural India could come anywhere close to these numbers. The numbers simply don’t add up… there’s obviously more to this story.

It’s also curious that the social impact assessments that are usually conducted for such projects don’t identify these issues. It’s hard to believe the largest company in India would have such poor risk management practices.

It’s also disappointing that Indian carmakers are not more aggressively exploring alternate and greener technologies. Environmental and climate degradation in India has reached crisis levels, and is contributing to very serious health problems for the current (and future) generations. Indian business leaders should be assuming greater responsibility and stewardship for the environment.

Building a new gas power car, no matter how cheap, in India is a really *bad* idea. Bicycles are 50x more efficient than conventional cars – perhaps 30x for the Tata – when measured in calories per person mile. (And BTW, I practice what I preach; I sold my car and ride a bike.)

In the 80’s I was working in India and explored developing a low cost wireless network – back when Indians still sent telegrams. But, the Indian Government had a much more brilliant idea: lay down a fiber backbone. The result? A world power in tele-services.

IMHO, India has a chance to do the same for personal transport. Develop a plug-in electric with user installed solar and a smart grid to level out a volatile energy supply. Or better yet, develop the worlds best personal maglev train – where 300 MPG is not unusual.

Seriously, India leapfrogged the available technology once already. Put some brilliant IIT engineers onto the problem and do it again!

Behind GM, Ford, and Chrysler, the Tata can have the dubious distinction of being tied for the worlds smallest, worst-built, and absolute cheapest piece of junk on the roads, or whatever they drive on over there. One might ask if they have a 4 wheel drive model but, then consider if they even have four wheels on which to drive. Given the stature of the factory and progress, it is apparent Tata means… well, “nuthin”. We’ve seen this before when the Hundai made it’s debut and was immediately recalled for brake system failures which apparently were not included for the then bargain basement price of $6,500. Wonder what one gets for $2,500?

The new Tata is NOT a gas powered car. It runs on Compressed Air, which is produced by an electrically powered Self-contained Pump. It probably won’t work perfectly the first time out. What does? But it is cause for hope.

Teed: You are correct, there is a compressed-air variant. However, the main Nano engine is a 0.6 L petrol plant.

I would love to ride in one… on a controlled road on private property. The idea of traveling in one at speed on an Indian road is horrifying. When I was younger, I _did_ ride in a French 2CV… young and foolish.

@Teed Rockwell:
You’re confusing the Tata Nano, which is indeed a gasoline-powered car (see Wikipedia and CAR Magazine UK), with another Tata project (a collaboration) for a compressed-air car that has been long delayed (see Autoblog). Like yourself, I am quite curious about the latter vehicle, but in this economic climate, the compressed-air car might not appear for another couple of years at least.

A STRIKE WAS ORGANIZED TO KILL THIS COMPANY, A 2500 $ CAR IS A REAL THREAT TO THE ESTABLISHMENT .. NOT TO MENTION THAT IT RUNS ON COMPRESSED AIR… NO WONDER THE CEO WAS KILLED BY AN UNKNOWN PROVATUER DURING THE STRIKE

Er, everyone… no matter Tata’s project is Electric or Gas, why did you forget Ralph Nader did not love rear-wheel drive layout?

I just hope everything in the world goes well.
However, Nano (at present) – wiper 1, door mirror 1, no ABS, NO AIRBAG, and 3 nuts for 1 wheel per. So, even if the American finally can buy this car, I have no doubt that the first complaint by Consumer Reports will not concern the engine or the design, and it will not be $2,5000 ver.

wake up !
it’s the worlds’ most expensive casket.
why not ask china to manufacture it
maybe they’ll give us a discount on the lead they’ll “lace” it with
(by the way, enjoy your next order of chinese take-out !….-think about it…)

“In a country like India, where “sentiments” play an important role, we must understand that the same people in Gujarat region (where the facility is currently located) are the ones who gave their lands freely to Mr. JRD Tata, in 18th century to fight the British. ”

Dear Mr. Rajagopalan,

you have mixed up some events in your mind, the site in gujarat was a grazing ground on which a facility to rear cattle was setup following a devastating famine to which end Mr. Ratan Tata’s ancestor and the founder of the Tata group Jamshedji Nusserwanji Tata had contributed a sum in the 18th century. An article refering to the same can be found here http://deshgujarat.com/2008/10/07/tatas-connection-with-gujarats-nano-land1899-and-2008/

To fight the British the nationalistic J.N. Tata and not JRD Tata had funded the Indian National Congress in the 1800’s and he had carried on the economic fight by envisioning India’s first steel plant. first hydroelectric plant, first truly international indian hotel… the Taj, Indian Institute of Science etc etc. for a brief history of the group please go to http://www.tata.com

The the story here is that the competition is doing the best it can to stall the roll out of the Tata Nano for various reasons.

What a piece of junk! How safe is a $2000 heap of crap going to be. I know the speeds or slower on Indian roads but the basic laws of physics still apply. Two of these things hitting each other head-on at even 30kph his still going to remove the need for coffins. Maybe life is cheaper in India.

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